HONG KONG – HSBC shareholders in Hong Kong are mulling calling for an extraordinary meeting with management and taking possible legal action against the bank's scrapping of dividend payments.
HSBC and other top British banks on Wednesday (April 1) announced the suspension of payouts after pressure from the regulator to save their capital as a buffer against expected losses from the economic fallout from the coronavirus pandemic.
Founded in Hong Kong about 150 years ago as Hongkong and Shanghai Banking Corp, Europe's biggest lender by assets has a large number of small shareholders in the city who have long benefited from the bank's stable dividend payments.
Some of the angry Hong Kong shareholders have come together and have created a dedicated Facebook page, which had more than 3,000 members as of Sunday, to discuss action to be taken against the London-headquartered bank's dividend halt.
“At this stage, we must call an EGM (extraordinary general meeting) to let the management explain to us,” H.T. Chan, a 46-year-old retired driver who holds the bank's stock and is part of the Facebook action group, told Reuters.
“For legal action, it depends on what they respond in the EGM. Hopefully, we can call this meeting.”
Shareholders of a company with at least 5 per cent of the total voting rights may require it to convene an extraordinary general meeting, according to Hong Kong laws.
HSBC chief executive Noel Quinn in a letter to Hong Kong shareholders after the decision to scrap dividend said the bank board would review the stance once the economic impact of the pandemic was better understood.
“We profoundly regret the impact this will have on you, your families and your businesses. We are acutely aware of how important the dividend is to our shareholders in Hong Kong,” he said.
Hong Kong is HSBC's single most important market, and it is one of three note issuing banks there.
A spokeswoman for HSBC said on Sunday the decision to cancel 2019 dividend was taken at the “direct request” from the British regulator, and the bank was not able to comment on any legal proceedings not yet commenced.
“I am following the majority action. This is a significantly essential issue as you have promised substantial and persistent dividend-paying, but you fail to do that,” said Kingsley Chow, a 39-year-old unemployed man relying on dividend income.
“Our first demand, at least, you have to open EGM to explain to us face-to-face, not just an apology letter!,” he wrote on the Facebook page, referring to Quinn's letter.